Q4 2023 Cango Inc Earnings Call
Unknown Executive: Transcribed by https://otter.ai Good morning and good evening, everyone. Welcome to Cango Inc.'s fourth quarter and fiscal year 2023 earnings conference call. At this time, all participants are in a listen-only mode.
Good morning, and good evening, everyone welcome to Kangaroo, Inc, 's fourth quarter and fiscal year 2023 earnings conference call.
At this time all participants are in a listen only mode. This call is also being broadcast live on the company's IR website.
Unknown Executive: This call is also being broadcast live on the company's IR website. Joining us today are Mr. Jiayuan Lin, Chief Executive Officer, and Mr. Yongyi Zhang, Chief Financial Officer of the company. Following management's prepared remarks, we will conduct a Q&A session.
Joining us today are Mr. Xiao Yuan Lynn Chief Executive Officer, and Mr. Young Chang Chief Financial Officer of the company. Following management's prepared remarks, we will conduct the Q&A session. Before we begin I refer you to the Safe Harbor statement in the company's earnings release, which also applies to the conference.
Unknown Executive: Before we begin, I refer you to the Safe Harbor Statement in the company's earnings release, which also applies to the conference call today, as management will be making forward-looking statements. With that said, I am now turning the call over to Mr. Jiayuan Lin, CEO of Cango. Please go ahead, sir.
Call today as management will be making forward looking statements.
With that said I am now turning the call over to Mr. Jaguar and Lynn CEO of Ken Guy. Please go ahead Sir.
[laughter] plug a hole for you Josh.
Jiayuan Lin: Hello everyone, and welcome to Cango's 4th quarter 2023 earnings call. 2023 is a year of extreme challenges. The overall economy is recovering well, but it is under pressure from various factors abroad in the short term. The recovery rate is lower than expected.
Oh you do.
Hello, everyone and welcome to <unk> fourth quarter 223 earnings call.
Yes did you tell agenda.
Thank you Gigi please ensure Michael Gunther <unk>.
Sure.
Hey, Jeff.
Jiayuan Lin: Consumer confidence is still insufficient. From the perspective of the test, the traditional fuel-cell car market continues to shrink. The new energy market oil refueling rate has increased, but the internal volume is serious. The price war has swept the entire test. , In the second half of 2023, some retailers are facing a crisis. In the lower-level markets, small retailers are facing a problem of survival. 2023 proves to be a year of resilience in the face of headwinds. While a long-term economic recovery remained on the horizon, the confluence of domestic and international factors caused a temporary slowdown. This resulted in slower-than-anticipated growth and dampened consumer confidence.
Well great.
D E Shaw Pizza Ashish.
Okay.
Rental language versus RTC.
Shimon.
I'm sorry, it would be too soon.
Angela Chocolate tenure, she Jensen got choices.
A good your tango two sharp switch jobs, who you shouldn't be doing.
So your children to them yet.
Yeah sure opinion when do those once you got to do with shorter.
Sure This is Sean.
So it goes at midnight Central time.
Tony its really proved to be a year before.
So headwinds, while our long term economic recovery remains on the horizon.
Both domestic and international factors caused a temporary slowdown this resulted in slower than anticipated close and dampened consumer confidence.
Jiayuan Lin: In the automotive sector, the traditional fuel vehicle market contracted steadily, while new energy vehicles and EVs experienced a surge in market share, sparking fierce competition within the sector. Price Bulls became a norm in the auto sales landscape, triggering a necessary restructuring within the industry. This shift favored larger players and accelerated the survival of the fittest scenario.
Ultimately they've stuck to their traditional field vehicle market contracted Saturday, while new energy vehicles.
This experience has such high market share sparking fierce competition within the segment first of all it became a normal auto sales landscape triggering unnecessarily restructuring we think the industry. This should be for larger players and accelerated specified pools, the photos that scenario dealerships patil.
Jiayuan Lin: Dealerships, particularly smaller ones in lower-tier markets, faced significant operational challenges, especially in the latter half of the year. In such an environment, in the fourth quarter of 2023, the company achieved a total revenue of RMB 1.31 billion, and for the full year of 2023, the company recorded a total revenue of RMB 1.7 billion. And by the end of the fourth quarter, the total debt balance was reduced to RMB 100 billion. M1 plus is 2.66%, M3 plus is 1.37%, and the risk window is further reduced.
Particularly smaller ones they know what hit market face a significant operational challenges, especially in the latter half of it yes.
So I'd say on the telephone.
Sure.
To ensure sufficient from Tony B E.
Oh, no I was saying there.
<unk> also moved towards controlling B E G.
Did you do more <unk>.
You bet.
You bet.
Each outweighed by brands aren't going to do.
<unk> outweigh burns that you'd get so cheap.
Uncle <unk>.
Got you.
What also tissue teaching genco, the jumper until Youre short term D green timber ease.
Jiayuan Lin: In addition, the company continues to promote a strict policy to reduce the cost of operating. Despite a challenging market environment in 2023, Cango delivered total revenue of $130 million in Q4 and $1.7 billion for the full year. The company strategically reduced its total outstanding financing balance of facility financing transactions to approximately $10 billion RMB by year-end. Our credit risk metrics remain stable with M1 plus and M3 plus delinquency rates at 2.66% and 1.37%, respectively, reducing our risk exposure further.
Despite a challenging market environment in 2023, I can't go to live with total revenue of 100, I'm splitting that out in Q4.
$1 7 billion for the full year, the company's strategic favorite use these total outstanding financing balance off the city they financing transactions to approximate 10 billion by year end.
Credit metrics remain stable wisdom was plus three plus delinquency rates at $12 six 6% at 1.37%, respectively. When do you think our risk exposure further.
Jiayuan Lin: To navigate this dynamic market, Cango implemented strict cost-reduction measures and efficiency enhancements, successfully lowering operating expenses.,,,,, 33.3 Notably, Cango maintains a strong financial position backed by robust liquidity and ample cash reserves. As of December 31, 2023, the company had 3.33 billion RMB in cash, cash equivalents, and shorted investments, as well as restricted cash, that is bank deposits held for shorting investments.
Maybe get these dynamic market can go implemented strict cost reduction measures and efficiency Hoffman. So it's definitely lower operating expenses.
So the if you will.
George I wonder do to shrink so it shouldn't do prepay.
Just.
Yes, so as soon as it also.
Also you shouldn't you shouldn't do Joe <unk>, you shouldn't do that turned towards it didn't go to look we don't mean be sensor Cynthia Cynthia so.
So we've also assure you you'll funds arent you just couldn't deal with towards aren't people that youll either Paul John.
But I can't go maintains a solid financial position backed by robust liquidity and ample cash reserves as of December 31st 2023. The company posted 333 billion aren't being cash cash equivalents and short any fast meant that's what I was restricted cash that is bank deposits helpful short any batsman it's Charles.
Jiayuan Lin: This strong financial foundation provides a springboard for the sustainable growth of our existing businesses and fuels our exploration of new ventures. At the business level, the management team has discussed market and industry trends. On the one hand, we have cleaned up the new car inventory, and on the other hand, we have developed a strategic strategy for the integration of the two platforms. In the fourth quarter, Cango will officially integrate Cango Good Car, which focuses on new car trading services, into Cango Good Car Plus, which focuses on second-hand car trading services, to achieve resource integration and improve operating efficiency. The integrated Cango Good Car app will create an online market, connecting car suppliers, after-market service providers, and connecting small-to-medium-sized car users in the lower market.
On April Foundation provides a spring board for the sustainable growth of our existing businesses I would say it was all exploration of new.
So you tell me what are you seeing your emphasis on G suite.
So the.
The Shinto Coltrane teaching me do you want me to do.
So when things are turning it from June <unk> to Tango two Mrs. Jones turn for machine tool show your food culture people turn to Oswald So Joe your food clinical utility being cheap. So you shouldn't see you in terms of what he says he showed a roomful of Florida, Tennessee, Utah.
John Thats, all you can shed some shallow.
Some of them didn't you tell you I'm glad you bong horses on food.
Shall we shall have the NDA. Shortly this is onshore beach to Arizona.
Jiayuan Lin: It will be an online auction around the real-time transactions of second-hand cars and three major business scenarios of B2B matching and agent help buying. It will provide products and services that integrate the entire transaction process, covering historical car mining, car evaluation and inspection, delivery logistics, insurance, supply chain finance, etc. The platform revenue will mainly come from top-level store rentals, membership fees, and service product fees.
We don't honestly, so Joe you've done so far as soon as I said is on Paramount B to B tool, it's easier lymphoma Sundar you we told you.
I'm glad you're all your thoughts and the time pick your fruit hunger leases took ones how do children on pinnacle, So Joe Poodle bullshit.
The genome.
So you don't really allow you to do.
Go forward time being sulfate central Colombia.
Jiayuan Lin: To adapt to evolving market conditions and capitalize on industry trends, we took proactive steps to streamline our operations. This included clearing our new car inventory and consolidating our platforms into a single powerful solution. In Q4, we successfully merged our new car platform, Cango Good Car, into Cango New Car, our used car platform. This strategic move optimizes resource allocation and boosts operational efficiency. The upgraded Cango YouCard app now functions as a comprehensive online marketplace.
That's absolutely evolving market conditions and capitalize on the industry trends, we took proactive steps to streamline our operation space included clearing our new car inventory on consolidating all platforms into a single powerful solution.
Therefore, we successfully merged all new car platform can go how chiller into our candle Yakov our used car platform.
Strategic move Optimizes resource allocation and both operational.
Efficiency.
The upgraded Kangoo Youll malfunctions comprehensive online marketplace. It connects upstream vehicle suppliers after market service providers and downstream more data I think know what tier cities. This integrated platform offers users a full suite of services.
Jiayuan Lin: It connects upstream vehicle suppliers, aftermarket service providers, and downstream small dealers in lower-tier cities. This integrated platform offers users a full suite of services throughout the used-car transaction process, catering to three main scenarios, that is, online auctions, dealer-to-dealer transactions, and broker-assisted deals. Cango YouCard goes beyond facilitating transactions.
Used car transaction process Cato rental stream banksy now.
That is all my options do you know what to do.
Neither transaction and broker dealers can go you'll call goes beyond solicitation trusts, but let me tell you think transactions.
Jiayuan Lin: We provide a robust ecosystem of services, including access to historical vehicle reports, vehicle evaluation and inspection, logistics and delivery, ensuring solutions, and supply chain financing. Our revenue streams will primarily come from upstream store rentals, membership subscriptions, and transaction-related services.
A robust ecosystem of services.
Access to historical vehicle repos vehicle evaluation that inspection logistics, something they've already ensuring solutions our supply chain financing all revenue streams, while problem problem or are they coming from upstream install rentals membership subscription and transaction related services.
So did you do well not be room for a whole determine who used to have pinkeye, Jimmy Choo, Jimmy rigged U G E G. Joe Fool you.
Joe Joseph Tung Blood test.
Unknown Executive: Cango Inc. streamlined operations within the integrated Cango YouCard platform in Q4, which included the introduction of a fixed-price end-to-end transaction service for cross-regional YouCard purchases. This innovative service simplifies and secures long-distance transactions by offering price verification, vehicle inspection, guarantee, and delivery services. Unknown Executive, Jiayuan Lin, Yongyi Zhang, Cango Inc. While actively recruiting third-party sellers and shops to enter the platform, we are also using self-operated shops to increase platform activity, incubate, and explore more possibilities. At present, the content of our self-driving electric vehicle service mainly includes four categories.
Gumbel Joseph.
So what you do Joe you can binge view, we streamline operations within the integrated <unk> platform. In Q4. This included the introduction of a fixed price dental and transactional so faithful cross regional used car purchases.
People that have service simplified unsecured long distance transactions by offering price verification vehicle inspection guarantee and Guinea for it services.
So did you do a P. P. Nissan agenda some of your T cell phone much idea Bob O'shaughnessy Bajaj Hunker has seemed to also do that for them to.
You said it well.
She also logo wanting to do it.
Why do you assume to jump up a bunch of Chico foolish as Sunchips biofuel sensual Joshua Beach was the only one.
So that's from Johnson <unk> Johnson.
Q4, 38 upstream third party sellers have set up stores on Kangol youll cost offering a comprehensive selection of vehicles, including you on used cars along with traffic generation services.
Unknown Executive: The first is self-driving customized vehicles, mainly customized vehicles for pure financial business. At the same time, customized vehicles cooperating with other financial companies are used as platform vehicles. The second is C2B, that is to say, the C-client becomes a transactable vehicle, and the C-client and B-client customers complete the transaction on the platform. At the early stage, it mainly relies on pure loan clients.
Leveraging our expertise in sales funnel management.
9887 potential business typically in.
In Q4, we said definitely converted a significant portion of leases providing services to a 3400 and like my own life Martinez facilitating 530 used car transaction.
So I thought it would be simple much IP improved teams with the tools when we get to you.
Boots and jumping down to four four times looking Brooklyn Rishi.
So you can feel food the new ball has stalled a bit.
So it just has to do so.
Unknown Executive: In the fourth quarter, external clues are also introduced for conversion. The third is the integration business between small and medium-sized car manufacturers. The company provides integration and logistics services for the generation and transaction. The last is the insurance business in the post-market.
Jean Louis you just.
Tusa Deutsche that aren't doing well go through that.
So again, she says C to B G boss sees only shows what Ben we could show you trigger that pizza is home to four cities don't cohorts up you're going to want to enjoy Fuji.
No.
So do you your new web, which is what <unk> is doing well.
Unknown Executive: In the fourth quarter, in addition to car insurance, our insurance K&A team tried and promoted non-car insurance products in the area of large customers, such as commercial insurance, transport insurance, etc. Besides attracting third-party sellers, we are also maximizing engagement and exploring new opportunities through our self-operated stores. These stores offer a diverse range of services in four key areas. First, they offer repossession car management. We handle repossessed vehicles primarily sourced from our auto financing business and collaborations with other lenders. Lead Conversion.
So for sure because once agenda Truecar goes.
Also we are choosing to join Gee showing them the tools that you would have.
So the whole system zoomed up.
So did you do to tissue and work with a bunch of time due to Taco Puneet G. G Murphy tuitions aren't being that sounds it for too long.
I'm trying to push into the hands of Shandong.
Besides attracting third party status, we're also maximizing engagement and exploring new opportunities through our self operated stores. These stores will have a diverse range of services in all key areas. Firstly, we possess call management, we handled repossessed vehicles, primarily sourced from our auto financing business and collaborate.
With auto lenders seven Stacy Tobey.
Lead conversion, we transform individual cost them, a knee deep into tradable asset facilitating transactions contained Adidas will now platform.
Unknown Executive: We transform individual customer leads into tradable assets, facilitating transactions between them and dealers on our platform. We initially focused on existing financing customers, but now we have expanded lead sources in Q4 to boost conversion rates. Third day: B2B transaction facilitation.
Initially focused on existing financing partners, but now we have extended lead sources in Q4 to boost conversion rates, but they'd be it'll be transaction facilitation, we provide transaction and logistics support for small dealer to dealer sales and phosphate we have expanded our insurance services our insurance teams offer.
Unknown Executive: We provide transaction and logistic support for small dealer-to-dealer sales. And fourthly, we have expanded our insurance services. Our insurance team offers comprehensive coverage, including auto insurance, and has a skill for non-auto options like work injury and road insurance for key regional clients.
Oh, it offers comprehensive coverage, including auto insurance and that Q4, not auto options like will enjoy.
Okay original clients.
Jiayuan Lin: As an online market, a good user experience is based on platform technology. In the fourth quarter, we will use digital means to match the various resources of vehicles, customers, funds, etc. In addition, we will use standardized, standardized, and intelligent transactions to fully support services. We hope to truly promote high-efficiency communication of second-hand vehicles all over the country, to serve our small business owners and help them to reduce operating costs in the low-value industry and expand income sources, thereby increasing the survival rate. Cango has never changed its vision of building a car service platform.
Julie you can she doesn't always.
Although you won't go to yet a pizza.
She is with digital with digital.
Yeah.
Tier two foods.
John could you did you push them through and social.
<unk> grew from Belgium, quite soon though one of the joys agenda and paid off.
She went into ours. So it's like Trimble room, we need to go through.
You should also.
She is well how will miss shouldn't be too. So it's only going to bundle the Commons at Hungary, Gucci junk doing zoom, but put ourselves.
To go through.
Congo Genco tofu.
Jiayuan Lin: In the future, we will continue to polish and improve Cango's core ability in the industry value chain through high-quality services and products. At Cango Youcall, we understand that a superior user experience hinges on a strong technological foundation. In Q4, we deployed a central AI platform leveraging our digital expertise to optimize resource matching for vehicle inventory, customer needs, and auto financing. This powerful tool, combined with our standardized, streamlined, and intelligent transaction services, aims to create a nationwide network for efficient used car circulation. Furthermore, we remain dedicated to empowering small businesses. We offer services that help them reduce operating costs and diversify revenue streams, especially during challenging market conditions. Ultimately, our goal is to enhance their survival rate and overall success.
Two week IBM, we like when would you open the floor for time being put on a more partisan hungry.
Yeah, It sounds I didn't do the fishing the leak.
Hang on I'll call, we understand that.
Andrew It's only a strong technological foundation in Q4, we deployed essentially I platform <unk> digital expertise to optimize resource matching for vehicle inventory customer needs and auto financing. These powerful tool combined with all the standardized streamlined intelligent transaction services.
And to create a nationwide network for efficient use cogs circulation.
Furthermore, we remain dedicated to empowering small dealerships, we offer services that help them reduce operating costs and diversify revenue streams, especially during challenging market conditions.
Ultimately our goal is to enhance their survival rates at an overall success.
Jiayuan Lin: Cango's vision remains steadfast to become an industry leader by continuously refining and offering top-notch services and products across the entire automotive value chain. In addition to the online marketplace business for cars, we are also constantly paying attention to opportunities for new business exploration. Unlike the domestic car market, the export of second-hand cars in China has a greater chance of growth. China, as the world's largest car manufacturer and market country, has a huge car stock, which provides a lot of resources for the export of second-hand cars in China.
Vision remains steadfast to become an industry leader by continuously refining on offering topnotch services, our products across the entire automotive value chain.
So he's hungry Youtube we've done this year.
You know what.
When we you just couldn't do we she knew what comes with it cheaply you when is she doses from two of them for you.
Duniewassal to Truecar, Joe Giordano Sundar, you quit doing what are we trying to treat thought that she searches for Susan Jiang Yong youre paying down debt.
So we don't want also to Truecar people know fufu.
Jiayuan Lin: At the same time, the Chinese government has introduced a series of policies to support and regulate the development of the second-hand car market. This not only helps to improve the transparency and fairness of the second-hand car market but also helps to improve the quality and reliability of second-hand cars, thereby enhancing their competitiveness in the international market. China has strong capabilities in car manufacturing and parts supply, which makes the price of second-hand cars in China more competitive globally.
Sure.
She did something so that's the hope.
So this isn't a fungi.
So putting go to Arthur this is Tony.
How're you doing.
Sit down so Kashi tumazos John what.
Jesus on lets you wouldn't be doing what she said.
For me it you'll know turned on my tour in June.
Chocolate Ginger will friend Joe.
Joe the other two doses.
Jiayuan Lin: At the same time, as the largest international trading country, China has a wide range of international logistics capabilities, ensuring safe and fast delivery of cars to buyers around the world. Cango Eureka's online marketplace is just one facet of our growth strategy. We see significant potential in China's burgeoning used car export market, unlike the fierce competition within the domestic market. China, as the world's largest auto manufacturer and consumer, possesses a vast pool of used cars, a gold mine for exporters. Additionally, government policies are fostering a more transparent and regulated used car market.
Those are the three startup which are more equal June volume Youll find out what you ordinarily coachable, Andrew I'm quite sure that John sort of Joseph Janesville My John.
Kangaroo Youll Costco online marketplace is just one of our growth strategy, we see significant potential in China's burgeoning you'd call asphalt market. Unlike the fierce competition within the domestic market in China, the world's largest auto manufacturer.
A vast pool of used car.
Mindful Exporters'. Additionally, government policies are fostering a more transparent and regulated used car market is translating to higher quality and more reliable vehicles that are competitive internationally.
Jiayuan Lin: This translates into higher quality and more reliable vehicles that are competitive internationally. Furthermore, China's robust auto manufacturing and parts supply chain keep used car prices competitive globally. Leveraging its position as the top international trading nation, China boasts a well-developed logistics network, ensuring efficient and secure delivery of used cars to international buyers. In 2023, China exported more than 5 million vehicles to the world. This data is expected to continue to grow.
China's robust auto manufacturing and parts supply chain keep used car prices competitive globally.
R J its position as the top international trading nation from China bus, a royalty followup logistics network, ensuring efficient and secured any flurry of youth costly international buyers.
Well I was in your June what she social Codell in total by one time with juices, Judy so useful you'll want Suzhou Zhengzhou, when we're kind of ours to her.
Jiayuan Lin: We are optimistic about the development prospects of the second-hand car overseas business. We are actively promoting and landing overseas exploration business. Thanks to Cango's rich experience and foundation in the domestic car market in China, as well as the capital support and broader market opportunities it can bring as an American listed company, we have created an online and offline integrated second-hand car information exchange and export service platform, which is mainly aimed at new car dealers in developing countries to help them easily obtain the richest car resources in China's largest car manufacturing and consumer market. China's position as the world's leading auto exporter with over 5 million vehicles shipped in 2023 and a projected upward trend presents a compelling opportunity for the used car export market.
On Tianjin Suzhou <unk>, so a lot of times with you.
At what time, she sources Duffield, Virginia for Gucci.
It's always Jeremy a question on <unk>.
Two quick one with Basel Shan Shan Shan.
So ashish Jojo trucco for Peter.
She fungi, which are that she said she also banducci.
To choose from quarter to quarter changes.
<unk> three <unk>.
It showcases our fulfill that you saw this year.
China's position as the world's leading auto last quarter with over 5 million vehicles shipped in 2023 on a projected upward trend presents a compelling opportunity for the used car market recognizing these potential kangaroo is actively pursuing these.
Jiayuan Lin: Recognizing this potential, Cango is actively pursuing this exciting new venture. Leveraging our extensive experience and network within China's domestic auto market combined with the advantage of being a U.S. listed company, which brings us access to capital and broader market reach, we've launched a comprehensive used car information exchange and export service platform. This innovative platform, integrating both online and offline resources, caters specifically to auto dealers in emerging and developing countries. By partnering with Cango, these international dealers gain easy access to China's vast pool of used vehicles, a significant advantage in today's global market. Our cross-border second-hand car information exchange site www.autocango.com was launched earlier this month with more than 75,000 online SKUs, and about 500 to 1,000 new SKUs are added every week.
Sanchez breaking.
Breaking out the extensive experience and know what breathing China's domestic auto market combined with the advantage of being a U S listed company, which brings us access to capital our broader market reach.
Launched a comprehensive used car information exchange on export service platform.
<unk> platform integrating both online and offline resources keto, specifically to auto dealers, the emerging and developing countries by partnering with <unk>.
Partnering with Tango Lee's international theaters going to easy access to China's vast pool of used vehicles, a significant advantage in today's global market.
Well I mean, the part you honestly, so ashish Joe who wants.
Diablo Diablo auto Kengo Dot com.
We have two sons yet.
Yeah, its Kyoto Foods talk what you won't she went with genco being made those children.
Jiayuan Lin: Autocango will use innovative AI technology to improve the accessibility of vehicles, search efficiency, and user-friendliness to accurately meet the personalized needs of each customer and ensure the transparency, efficiency, and security of the transaction. Our goal is to become an excellent website for overseas buyers to purchase second-hand Chinese cars. Autocango, our cross-border used car information exchange platform www.autocango.com was launched in early March 2024 with an impressive inventory exceeding 75,000 SKUs. This platform is constantly growing, with approximately 500 to 1,000 new vehicles added every month. Leveraging cutting-edge AI technology, AutoCango empowers users with an intuitive search experience, making it easier than ever to find the perfect car.
Each English U S SKU.
So Ken go Joan Tong Hsing.
If you go to the coupon Wuxi.
So I shall do so Joe.
Joe who Johan Shea Eastern Germany, jewelry with cohort one as usual being Triple Joe You said to me do show do so androgen when would the move belt system with her why my jaw Schenkel, our Stonewall onshore the usual stuff.
So can go our cross border used car information exchange platform or Triple W. Hotel Kenkel Dotcom was launched in early March 2024, with an impressive inventory exceeding 75000.
Can you please talk almost constantly growing with approximately 500000 new vehicles.
Hey, <unk> cutting edge AI technology also can go empowers users with an intuitive search experience, making it easier than ever to find the perfect comp.
Jiayuan Lin: Furthermore, our platform prioritizes user interaction, ensuring it caters to each customer's evolving needs. Transparency, Efficiency, and Security are at the core of 4toCango. We are committed to providing a seamless and secure experience for all users, with the ultimate goal of becoming the go-to platform for overseas buyers seeking high-quality usable cards from China. Although the external environment is still full of challenges, we are confident about the development potential of the Chinese market and the business model of Cango's full-fledged platform service. In 2024, we will continue to develop the automotive trading field, stick to digital innovation and AI-enabled, expand Cango's product and service coverage across the entire value chain, and work hand in hand with our car manufacturers. In the process of digitalizing and technologically improving Chinese automobiles, we are thinking about our own strength.
Furthermore, our platform prioritizes direction sure caters to each customer's evolving needs transpire.
Transparency efficient CNS acuity.
The Codell photo Kengo, we are committed to providing a secure experience for all users with the ultimate goal of becoming a go to platform for overseas buyers seeking high quality used cars from China.
Do you can garner.
You do a two months ago. When it was just on the funds on June <unk>.
The yield was too much issue.
When would you like to issue some Gucci so Joe your degree gents its roots as long as U G. A R from.
From them towards downtown courtyard. Some good chunk of it is all the time people hofuf.
You will remember that says uncle Bob.
Sure so called you.
What's your sort of Chinese foods could you sort of pingo <unk> social digital journey.
Jiayuan Lin: While acknowledging the current market complexities, we remain bullish on the long-term potential of China's auto industry and the strength of Cango's end-to-end service model. In 2024, we are committed to solidifying our position within the auto transaction market, pioneering digital innovation and leveraging AI to enhance our platform and user experience, as well as expanding our offerings by introducing new products and services across the entire value chain. By working along with our dealer partners...
Acknowledging the current market complexities, we remain bullish on the long term potential of China's auto industry on a strength of Kankles end to end service model in 2024, and we are committed to solidifying our position with any single transaction market pioneering digital innovation and leveraging AI to enhance our platform and you would think.
As far as extending our offerings by introducing new products and services across the entire value chain by working along with our dealer partners.
Unknown Executive: These initiatives will allow us to create significant value and become a key player in China's dynamic technology-driven automotive landscape. Now I'll hand over to our Chief Financial Officer, Michael Zhang, for a review of the company's financial performance. Thanks, Jiayuan.
These initiatives will allow us to create significant value and become a key player in China's dynamic technology, driven automotive landscape.
Sure Mr. Joel gay the CFO, Tony will lead you go away from as young woman.
Sure.
I'll hand over to our Chief Financial Officer, Michael Hao for review of the company's financial performance.
Thanks, Joe and Hello, everyone and welcome to our fourth quarter and full year 2023 earnings call.
Yongyi Zhang: Hello everyone, and welcome to our fourth quarter and four year 2023 earnings call. Before I start to review our financials, please note that, unless otherwise stated, all numbers are in RMB terms, and all percentage comparisons are on a year-over-year basis. Total revenue in the fourth quarter of 2023 was $130.2 million, compared with $487.1 million in the same period of 2022. Guaranteed income, which represents the fee income earned on the non-contingent aspect of a guarantee, was $42.1 million in the fourth quarter.
Before I started to review our financials. Please note that unless otherwise stated all numbers I RMB terms and all percentage comparisons.
On a year over year basis.
Total revenue in the fourth quarter of 2023, well $130 2 million compared with $487 1 million in the same period of 2020 to guarantee income which represents the fee income earned on a non contingent effect of a guarantee.
$42 1 billion in the fourth quarter.
Yongyi Zhang: Now let's move on to our cost and expenses during the quarter. Total operating costs and expenses in the fourth quarter of 2023 were $159.1 million compared with $698.7 million in the same period in 2022. Cost and revenue in the fourth quarter decreased to $110.9 million from $481.7 million in the same period, 2022. As a percentage of total revenues, cost of revenue in the fourth quarter, 2023, was 85.1%, compared with 98.9% in the same period, 2022. Sales and marketing expenses in the fourth quarter decreased to $4.4 million from $19.2 million in the same period 2022. As a percentage of total revenues, sales and marketing expenses in the fourth quarter 2023 were 3.4% compared with 4% in the same period 2022. General and administrative expenses in the fourth quarter decreased to 45.6 million from 66.2 million in the same period in 2022.
Now, let's move on to our cost and expenses during the quarter total operating cost and especially in the fourth quarter of 2023, well $159 1 billion compared with $698 7 million in the same period of 2022.
Cost of revenue in the fourth quarter decreased to $110 9 million from $481 7 billion in the same period of 2022.
As a percentage of total revenues cost of revenue in the fourth quarter of 2023 was 85, 1% compared with 98, 9% in the same period of 2022 sales and marketing expenses in the fourth quarter decreased to $4 4 million from $19 2 million in the same period of 2022.
As a percentage of total revenues sales and marketing expenses in the fourth quarter of 2023.
Three 4% compared with 4% in the same period of 2022.
General and administrative expenses in the fourth quarter decreased to $45 6 million from $66 2 million in the same period of 2022.
Yongyi Zhang: As a percentage of total revenues, general and administrative expenses in the fourth quarter 2023 were 35% compared with 13.6% in the same period 2022. Research and development expenses in the fourth quarter decreased to 7.3 million from 8.4 million in the same period 2022. As a percentage of total revenues, research and development expenses in the fourth quarter 2023 were 5.6% compared with 1.7% in the same period 2022. Net loss on contingent risk assurance liability in the fourth quarter was 22.2 million.
As a percentage of total revenues general and administrative especially in the fourth quarter of 2023.
<unk> 35 per cent compared with 13, 6% in the same period of 2022.
Research and development expenses in fourth quarter decreased to $7 3 million from $8 4 million in the same period of 2022.
As a percentage of total revenues research and give out, especially in the fourth quarter 2023 were five 6% compared with one 7% in the same period of 2022 net loss on contingent risk assurance liabilities in the fourth quarter were $22 2 million net recovery.
Yongyi Zhang: Net recovery on provisions for credit losses in the fourth quarter was 31.2 million. The recovery was primarily due to the positive impact of collections of financing receivables. We recorded $28.9 million in loss from operations in the fourth quarter of 2023, compared with $211.6 million in the same period of 2022. Net loss in the fourth quarter was $103.8 million. Non-gap adjusted net loss in the fourth quarter was $99.2 million.
Provisions for credit losses in the fourth quarter or $31 2 million. The recovery was primary due to the positive impact of collections of finance receivables.
We recorded $28 9 million in loss from operations in the fourth quarter of 2023, compared with $211 6 million in the same period 2022.
Net loss in the fourth quarter was $103 8 million non-GAAP adjusted net loss in the fourth quarter.
Was $99 2 million.
Yongyi Zhang: On a per share basis, basic and diluted net loss per ADS in the 4th quarter of 2023 were both 0.95, respectively, and non-GAAP adjusted basic and diluted net loss per ADS in the same period were both 0.91 respectively. For the full year of 2023, our total net revenue was $1.7 billion, total operating costs and expenses were $1.8 billion, net loss was $37.9 million, and non-GAAP adjusted net income was $0.6 million. Basic and diluting net losses per ADS were both 0.31; non-GAAP-adjusted basic net income per ADS was 0.01, and non-GAAP-adjusted diluted net income was Moving on, to our balance sheet. As of December 31st, 2023, the company had cash and cash equivalents of $1 billion, compared with $665.6 million as of September 30th. As of Dec. 31, 2023, the company had short-term investments of $635.1 million, while the company had restricted cash. Current bank deposit held for short-term investment of $1.7 billion.
On a per share basis basic and diluted net loss per ads in the fourth quarter 2023 were both sue appointing five respectively.
non-GAAP adjusted basic and diluted net loss per ads in the same period, where both 0.91, respectively.
For the full year of 2023, our total net revenue were $1 7 billion total operating cost and expenses were $1 8 billion.
Net loss was $37 9 million and non-GAAP adjusted net income was zero point.
6 million base.
Basic and diluted net loss per ads.
We're both 0.31 non-GAAP adjusted basic net income what paid yes was 0.01 and non-GAAP adjusted diluted net income was zero respectively.
Moving onto our balance sheet as of December 31st 2023, the company had a cash and cash equivalents of 1 billion compared with $665 6 million as of September <unk>.
2023.
December 31st 2023, the company had a short term investment of $635 1 million why would a company had restricted cash current back deposit health or short term investments of $1 7 billion as of September 32023. The company has short term investments of $2 4 billion.
Yongyi Zhang: As of Sept. 30, 2023, the company had a short-term investment of $2.4 billion. Looking ahead to the first quarter of 2024, we are now predicting our total revenues to be between RMB4.5 billion and RMB4.5 billion. 50 million and RMB 100 million.
Looking ahead to the first quarter of 2024, we are now predicting our total revenues to be between <unk>.
M B.
50 million and RMB 100 billion. Please note that this forecast reflects our current and preliminary view on the market and operating operational conditions, which are subject to change.
Unknown Executive: Please note that this forecast reflects our current and preliminary view of the market and operational conditions, which are subject to change. This concludes our prepared remarks. Operator, we are now ready to take questions. Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2.
This concludes our prepared remarks, operator, we are now ready to take questions.
Thank you.
To ask a question. Please press star one on your telephone who might be your name to P&L.
If you wish to cancel your request. Please press star two if you're on a speakerphone. Please pick up the handset to ask your question.
Unknown Executive: If you are on a speakerphone, please pick up the handset to ask your question. Your first question comes from Qingyu Liu, Unknown Executive, Jiayuan Lin. Transcribed by https://otter.ai. Pardon me, can you read your line? It's now live.
Thank you.
Yes.
Okay.
Okay.
Yeah.
Thank you Lee your line is now Lang.
Yes.
Okay.
Thank you.
Unknown Executive: Thank you. Your next question comes from Henderson Xiao from Goldman Sachs. Please go ahead. Transcribed by https://otter.ai Hello, Mr. Guan. I'm Emerson from Kaohsiung.
Zack Please go ahead.
Hey, Glenn it's Eric.
What Youre Ministry Goshen that I must say, our da Vinci XI or Sunderland actual.
Thanks, Alessandro through kind of all goes through gene you talked about roofing.
Unknown Executive: I have three questions. First, I saw that the company reached a strategic partnership with Cao Cao this year. What is the current progress? Second, I saw a lot of cash in the company's account. Is there a dividend arrangement in the future? The third question is, after the merger of the two apps, what will be the difference between the new Cangu Youche app and the previous one? Thank you.
No choice I'm with you in Q2 for sure.
Beyond the.
Harsher condom, which engels withdrawn mail dialogue there sandy.
Grupo <unk> vocal.
So it is ongoing here for kind of those were all down go app being drill hole Nat Schindler day by the time, we ultra App Orchard shutting the way it was coming out of the bottle.
Unknown Executive: Thank you. I'm Emma Sun from Goldman Sachs. I have three questions. First question, we noticed that the company has entered a strategic partnership with Taochuan Mobility. Can the management share some details on this progress? And the second question is that we noticed the company currency holds a substantial cash position. Will the company issue dividends, or distribute dividends? And my third question is, what are the differences between Cango EuroCard before and after integration? Thank you, Emerson.
Thank you at Amazon from Goldman Sachs. Three questions first question, we noticed that the company has entered a strategic partnership with Tata mobility can management share some details on Liza.
And second question is that we noticed the company is currency.
<unk> cash position not a company.
He should dividend distributed.
Distribute devine to distribute dividends and my third question is what are the differences in <unk> before and after the integration.
Okay.
Jiayuan Lin: Regarding the first question, as the leading sharing travel platform in China, Chaochao Travel has always strived to provide users with smarter, greener, and healthier travel services and experiences. Cango has rich experience and resources in the field of car transactions and after-market. We hope to use Canguo's own network of channels and driver advantages to jointly explore and expand business opportunities in the lower market with Chaochao Travel. Thank you, Emerson, for your questions.
Eagle warranty.
Good evening Shen the acquisition pushing.
Total pushing it.
You're welcome to do so.
Conduct cooking food.
I'll tell you what's actually Sergio you forces coaches on the Eagle Ford with a genius.
When we she won't be you won't have to Sundar she thought along law.
Your total solution.
Kerry to pencil sharpener.
If you would.
Thank you very much for your questions. The first one first.
Jiayuan Lin: The first question is, while Chaochao Mobility is a leading domestic shared mobility platform, we provide users with smarter, greener, and healthier travel experiences, and Cango is a powerhouse in automotive trading and aftermarket services. Our extensive network and vast vehicle inventory will enable us to jointly pursue business opportunities in China's high-growth, lower-tier markets. At the moment, our IT colleagues are working on the back-end system development.
First question.
Novartis as a leading domestic shared mobility platform.
<unk> uses a smarter.
Traveling.
And then Kent.
Motive trading.
Okay.
Our extensive network of box.
Centuri will enable us to pursue opportunities in China.
To your market.
Latino woman phones on the ITT also soon get to a hotel or two if you kind of thought of the Hulu, you'll fishing season when liquidity without you.
Jiayuan Lin: We will update you as soon as we have the latest progress. Currently, IT teams from both parties are working together on the backend system and program development. My second question is whether the company has been doing well in the past few years. We hope to share with shareholders the stage results of the company's development and increase the market's confidence in the company's future development. Will the company continue to do well in the future? We will still start from the overall strategic layout of the company and plan to combine business development with limited capital spending. On your second question, since going public, we've established a track record of rewarding shareholders with consistent dividends to further solidify confidence in Cango's long-term growth trajectory. For further dividend plans, we will maintain a prudent approach, carefully considering factors like overall strategic plans, business developments, and our cash flow position to ensure a sustainable dividend policy. The third question is about the combination of two apps.
Argentina from both parties are working together on the backend system and program development.
We'll provide regular updates to keep everyone informed of the latest developments as they unfold.
Well its yoga win T.
It sounds like January approval when was she won't you don't go too far down that you have seen some growth.
Our system goes away, that's not going to Shinji well.
Simple tissue, you'll food when the impact when the high sequential system, It's Andrei <unk>.
So you'll find that in addition to changing transition when do you think we will.
On your second question since going public with established a track record of rewarding shareholders with consistent dividend further solidified confidence in Ken goes long term growth trajectory.
The dividend plans, we will maintain a prudent approach carefully considering factors overall strategic plan.
Businesses and governments and our cash flow position to ensure sustainable dividend policy.
According to single wind down.
Jiayuan Lin: Cangu Youche, which was previously operated independently, mainly focuses on second-hand car transactions, including car service, car patrol, and real estate pricing. After the integration, in addition to the already existing second-hand car business, Cango U-Car also combines new car functions, including new car transactions, insurance, traffic, and a variety of third-party seller stores. Next, we will discover and launch more third-party seller stores, an active platform ecology, and bring more product experiences to platform users. Regarding your third question, prior to integration, Cango U-Car functioned as a standalone platform dedicated to used car transactions. This included sourcing vehicles, facilitating car searches, and hosting online auctions. Following the integration, Cango U-Car has evolved beyond the used car platform and now boasts a comprehensive marketplace featuring third-party sellers of new car sales, insurance, and traffic generation services. We are committed to continuously expanding this ecosystem by integrating even more third-party vendors, fostering a more dynamic and enriching user experience. Xie Xie.
Inc.
Shenzhen, leaving the total yield.
So Joe you. Therefore bulk will tell you that she took her she didn't support the war.
So who want to hope Fuller yield. So you tell me, who you feel have slipped in machine to machine tool that Joe you're going to both bulk Washington, Joey Bullshit blowdown thankfully the T cell phone my judgment JJ.
As usual I will Macquarie Park being sounds you couldn't do the central Mad Jack Apple all yeah Tyson that way.
Hum.
Third question privately integration I can't give you call functions as a standalone platform dedicated to used car transactions.
So I think vehicles with editing pas switches and hosting online auctions.
Following the integration Kangol Youll call has evolved beyond the used car platform.
A comprehensive marketplace, featuring third party sellers over a new car sales insurers and traffic generation services.
We are committed to continuous extend this ecosystem.
And even more third party vendors also ranked a more dynamic.
Richard.
Unknown Executive: Thank you. Thank you. Your next question comes from Pin Yulu from Civic Securities. Please go ahead.
Thanks.
Thank you.
Thank you.
Our next question comes from <unk> from Citic Securities. Please go ahead.
Unknown Executive: Hello, everyone. I'm Ping Yue from Zhongxin Motor Co., Ltd. I have two questions. The first one is how do we see the car market performing in 2023 and how do we expect the industry to develop in 2024? The second question is how is the progress of our second-hand car business going? In addition, have you considered collaborating with some of the leading broadcasters in some businesses? I'm from, and I have two
Hey, Guangzhou Hall was at Johnson, <unk> Johnson Guy that Linda Eddy you can show womens Transunion, otherwise that Nancy Joseph.
It depends how about on the awesome, yeah, they'll have to go higher.
I'm not sure when they're going through that.
<unk> do you want to know how do you get hopefully the two broad utilization.
Okay.
Securities I have two questions. So first question is could management share your insights for 2023 automotive market and provide the outlook for 2020 for my second question is on the used car business.
Unknown Executive: The first question is, could management share their insights for the 2023 automotive market and provide an outlook for 2024? My second question is on used car export. So, what about the progress, and has the company considered working with some KOLs? Thank you.
The progress and has the company considered working with some kols.
Oh sure.
Jiayuan Lin: As of the end of 2023, the overall situation has been in a low-to-high position. By the end of the year, including the beginning of 2020, car companies have launched a series of sales promotions. We believe that such sales promotions will continue for a period of time. At the same time, we also see intense competition, which has led to the suppression of all profits in the industrial chain downstream. Thank you for your questions.
<unk> done two shouldn't do you hope hub linked.
And you can guarantee vocal on the Western Union. So that you don't cut it something that you should be a little well, we're going we feel on the Zhengzhou Suzhou Zhengzhou Suzhou you don't ship doses when we kind of thought you did a ginger.
Yeah, Yeah sure Youll find either so Doug. Thank you for your questions for your first question.
Jiayuan Lin: On your first question, despite a sluggish start in 2023, the automotive market accelerated towards the latter part of the year and into early 2024. This momentum was fuelled by a series of promotional activities launched by car manufacturers. We anticipate these price reductions to persist for some time. However, the intense competition within the industry has resulted in margin pressure for various players throughout the supply chain.
Despite the sluggish start in 2023 of the automotive market accelerating towards the latter part of the year and into early 2000 tons for this momentum was fueled by a theory.
Series of promotional activities goes to buy car manufacturers.
Anticipating these price reductions will persist for some time however, the intense competition within the industry has resulted in margin pressures for various players throughout the supply chain.
Jiayuan Lin: Looking at the market structure in 2024, the new-energy vehicle penetration rate rose from 28% in 2022 to 35% in 2023 and is expected to reach 40% in 2024. We expect that the competition between the blue car market and the new-energy car market in 2024 will be even more intense. Blue car profits will shrink faster. New-energy car growth, but losses are greater. There is a lot of pressure.
Sorry.
Tsuneo until she's article I saw she she's Joseph towards neutral or they are in the end up passenger us about sums into audio I'll send you end up I mean, it sounds like you're adding oxygen jumped up I mean, just as well.
Our senior allow you to assist them pushing them to the Ginger Jones couldn't get you do not usually you need downwards.
Shimon to Gordon's question, Jo Tom Muldoon, Yada Yada yada.
Thank you for all the penetration rate has been surging over the years it rose from 38% in 2022% to 35% in 2023.
Jiayuan Lin: 2024 Outlook, NEV penetration has been surging over the years. It rose from 28% in, Unknown Executive, Jiayuan Lin, Yongyi Zhang, Cango Inc. While traditional gasoline-powered vehicles remain profitable, their market share is contracting rapidly. NEVs are experiencing robust sales growth, but manufacturers are currently absorbing significant losses. Thus, this contrasting dynamic presents substantial pressure on the overall market.
To reach 40% by 'twenty 'twenty four please.
<unk> is intensifying competition.
And UV segment as well as the conventional field vehicles separately well traditional gasoline powered vehicles.
Their market share is contracting rapidly and you Vivek theory thing robust sales glass manufacturers are currently absorbing significant losses, so or at least contrast, and dynamic presents substantial pressure on the overall market.
Jiayuan Lin: , AutoCango,,,,, On your second question, our used car export business. In March 2024, we launched Autocango, the first of its kind cross-border information exchange platform for the used car market. Autocango bridges the gap in information services by connecting domestic Chinese used car dealers with foreign buyers, specifically targeting auto dealers in left-hand drive markets across emerging economies. Distorting China's position as the world's largest auto market, Auto Cango empowers these international buyers with easy access to a vast pool of quality users. Powered by innovative AI technology, our platform streamlines the user experience, enhancing vehicle discovery, search efficiency, and user interaction to precisely meet evolving customer needs.
Well you also to.
Sure.
<unk> also took part Jason Shufu auto Kendall.
Also Tucson switching where my job she won't go in the jungle.
So to me I think she kimball, which I'm going to.
How do you ask Joey Ashish.
During the cold box well merchant.
The city should go away is the changing paradigm.
What drove.
Those two choices on what she says you know so when was Shuang you Couldnt chinalco choose on what you're doing waterflood changing topics.
Who shall faces.
She said yes.
What would appear to have the oncology in the future.
If you go to the Copel Wuxi.
So I showed you could joke wheelhouse you.
Good way to cope with the cushion for future being triple Joe you're pulling too sure Angie.
On your second question, our used car business.
In March 'twenty 'twenty four we launched the first of its kind cross border information exchange platform for used car market, although henkel bridges the gap in information services by connecting domestic Chinese used car dealers with foreign buyers, specifically targeting auto dealers in that can drive market across emerging.
Economies.
Origin, China's position as the world's largest auto market auto Kengo in policies International partners with easy access to a vast pool of quality used cars.
Goodbye.
Hi Tech platform streamlines the user experience.
Vehicle discovery.
Nancy.
Action to precisely meet evolving customer needs.
Although kengo prioritizes transparency efficiency and acuity.
Higher transaction process, ensuring a smooth and secure.
For all parties involved.
Two how are you.
So for me I forgot because there's only a few quick.
<unk> been toned Lucia Enzo John between year with some between timber.
Jiayuan Lin: Autumn Cango prioritizes transparency, efficiency, and security throughout the entire transaction process, ensuring a smooth and secure experience for all parties involved. We do not rule out any business opportunities in terms of overseas business cooperation. But we stick to the principle that we do not do business that does not clearly explain the logic of business and does not calculate the cost. At present, we believe that profitable business is business. Looking at the future, exploratory business with imagination can be invested in appropriately, but it will set a time node to avoid infinite consumption. On partnerships, we are open to partnership opportunities that align with the following criteria. Firstly, profitability. We prioritize ventures with clear business models and transparent cost structures. And secondly, long-term growth potential. However, to ensure efficient resource allocation, we conduct regular assessments within defined time frames.
Brazil shouldn't judge on when we're going to win them you need the yield types is there any kind of weird.
Sure.
They sit on total dunkley sitting so J&J that female we shouldn't your thoughts here.
Partnerships, we are open to partnership opportunities that align with the following criteria firstly profitability, we prioritize sanchez with clear business models, and transparent cost structures and <unk> long term growth potential however to ensure efficient resource allocation, we conduct regular.
Within defined timeframe.
Thank you.
Thank you.
We have no further questions at this time I will now hand, the call back to management for closing remarks.
Oh.
So as you can tell us about them hopefully it talks to his IGF. Thank you all for your participation and that closes today's earnings call.
Sure.
[music].
Unknown Executive: Xie Xie. Thank you. We have no further questions at this time. I'll now hand the call back to management for closing remarks. Thank you all for your participation. I will close this today's early call. Jiayuan Lin, Unknown Executive, Jiayuan Lin, Yongyi Zhang, Cango Inc. Jiayuan Lin, Unknown Executive, Jiayuan Lin, Yongyi Zhang, Cango Inc.